TX Promulgated Forms

Question 1

Broker-Lawyer Committee

Answer 1

• advisory committee under TRELA; drafts/revises contract forms for licensee use, not mandatory use
• 13 members, staggered 6 year terms
  
  • 6 Lawyers - selected by the commission
  • 6 Brokers - appointed by State Bar of Texas
  • 1 Member - appointed by the govenor
• does not promulgate (publish) forms
• develops forms and recommends their adoption

Question 2

Unauthorized Practice of Law

Answer 2

• Have to be an attorney to practice law/draft contracts or instruments to convey real property. If you aren’t and you do by…
  
  • drafting doc, other than forms in Sec. 1101.155 of TRELA, transferring/affecting real property or;
  • advises regarding validity of an instrument/title to real property
• …license/cert is revoked
• no illegal if using forms that
  
  • are adopted by the commission for that purpose
  • prepared by an attorney for that purpose
  • prepared by property owner

Question 3

Promulgated vs. Approved Forms

Answer 3

• Promulgated (mandatory) for use by licensees under TREC
  
  • licensee can fill out
• Approved for use by licensees under TREC (not mandatory)
• Promulgated Form - Exemptions
  
  • licensee functioning as principal
  • other form required
  • form prepared by property owner/attorney & required by
  • if no standard form in existance & using attorney/B-LC prepared form
• Changes to forms not allowed
  
  • except logo/business name outside border
  • inserting broker’s name in blank
  • parties make licensee strike/add

Question 4

Guidelines to Avoid Practicing Law

Answer 4

1. No altering forms
2. Say what you would say in court
3. Don’t talk about:
   
   • Rights
   • Remedies
   • Default
   • Validity

• “If you do this, they do that…”
  
  • NOPE! interpretting the law

Question 5

TREC has these forms for licensee use…

(Promulgated AND Approved)

Answer 5

• 6 Promulgated Contracts
• 15 Promulgated Addenda (including 2 Temp Leases)
• 1 Promulgated Amendment
• 2 Promulgated Resale Certificateds
• 1 Promulgated Notice
• 2 Promulgated Consumer Disclosures
• 7 Approved Forms

Question 6

One to Four Family Residential Contract

(Resale)

Answer 6

• properties under 4 units
  
  • anyhting over needs attorney to draft contract
• not for condo transactions

Question 7

Farm and Ranch Contract

Answer 7

• M-n-B land description
• Par. 13 - Rollback Taxes:
  
  • additional tax when not used for agriculture/doesn’t qualify for reduced tax rate
  • Buyer pays if buyer changed use (builder/developers)
  • Seller pays if seller changed use
• Par. 3 - Sales Price Adjustment, 10% cap
• Par. 2 - Addendum requirement for oil reservations
• Par. 7 - Property Conditions
  
  • more elements than normal, check:
    
    • crops
    • equipment
    • royalties
    • surface leases
    • restrictions & exceptions
    • rights & obligations of gov’t programs & coop/assoc memberships

Question 8

Residential Condominium Contract (Resale)

Answer 8

• “Cube of Air” ownership
• not used with fee simple title to land
• Par. 2 - Declaration & Resale Certificat
  
  • CC&R (Convenants, Conditions, & Restrictions)

Question 9

Unimproved Property Contract

Answer 9

• used when
  
  • intended use is 1 to 4 family dwelling
  • transferring unimproved land
• doesn’t address structures
• property is/isn’t located in TX AG development district
• Par. 13 - Prorations & Rollback Taxes
  
  • if taxes not paid at closing, buyer pays at end of year
  • if seller’s change in use results in assessments prior to closing, seller pays for assessments
• Par. 7 - Prop Conditions

Question 10

New Home Contract - 2 kinds

Answer 10

1. Incomplete Construction
   
   • Par. 7 - Property conditions
     
     • access, construction docs, cost adjustments, buyer’s selection, completion, warranties, insulation, evironmental matters, seller’s disclosure
   • Par. 13. - Prorations & Rollback Taxes
     
     • if taxes not paid at closing, buyer pays at end of year
     • if seller’s change in use results in assessments prior to closing, seller pays for assessments
2. Completed Construction
   • Par. 7 - Property conditions (more extensive)
     
     • access, acceptance of property, warranties, insulation, lender required repairs, completion of repairs, evironmental matters, seller’s disclosure, residential service contracts
   • Par. 13. - Prorations & Rollback Taxes
     
     • if taxes not paid at closing, buyer pays at end of year
     • if seller’s change in use results in assessments prior to closing, seller pays for assessments

Question 11

One to Four Family Residential Contract - ALL Paragraphs

Answer 11

1. Parties
2. Property
   
   • land/address, improvements, accessories, & exclusions
3. Sales Price
4. Financing
   
   • third party, assumption, or seller financing
5. Earnest Money
6. Title Policy & Survey
   
   • Title Policy, Commitment, Survey, Objections, Title Notices
7. Property Conditions
   
   • Access/Inspections/Utilities, seller’s disclosure, LBP disclosure/hazards, acceptance of prop conditions, lender required repairs, completion of repairs, environmental matters, residential service contracts
8. Broker’s Fees
9. Closing
10. Possession
11. Special Provisions
    
    • “END OF SPECIAL PROVISIONS”
12. Settlement/Other Expenses
13. Prorations
14. Casualty Loss
15. Default
16. Mediation
17. Attorney’s Fees
18. Escrow
    
    • Escrow, expenses, demand, damages, notices
19. Representations
20. Fed Tax Requirements
21. Notices
22. Agreement of all Parties
23. Termination Option
24. Consult An Attorney Before Signing

Question 12

Which TREC forms include time is of the essence?

Answer 12

1. Addenudm for Sale of Other Property by Buyer
2. Addendum for Back-Up Contract
3. Third Party Financing Addendum for Credit Approval
4. Reverse Mortgage Financing Addendum
5. Short Sale Addendum

Question 13

Identify the provisions in Paragraph 1 of One to Four Family Contract

Answer 13

• promise is known as the first consideration in the contract
• fill in names of all parties CORRECTLY - check deed, title policy, etc. to list seller’s information
• buyers provide ID at closing

Question 14

Identify provisions in Paragraph 2 of One to Four Family Contract

Answer 14

• 2A - property specifics are listed (legal description)
• 2B & 2C - items to remain
• 2D - any exclusions

Question 15

Identify provisions in Paragraph 3 of One to Four Family Contract

Answer 15

• 3A - down payment
• 3B - total of all loans
• 3C - sales price

Question 16

Identify provisions for Pargraph 4 of One to Four Family Contract

Answer 16

• financing (3rd party, assumption, seller financing)
• first contingency paragraph of contract

Question 17

Identify provisions in Paragraph 5 of One to Four Family Contract

Answer 17

• earnest money - remedy for default, not consideration
• applied to sales price at funding

Question 18

Identify provisions for Paragraph 6 of One to Four Family Contract

Answer 18

title policy & survey

• 6A - Title Policy: check who is furnishing
• 6B - Commitment: seller to furnish buyer with
  
  • 20-days after contract rec’d by title co.
  • can extend up to 15- or 3-days before closing, whichever closer
• 6C - Survey & Affidavit: provides three survey options
• 6D - Objections - once sent, seller has 15 days to cure or contract terminated
• 6E - Title Notices - 9 notices
  
  1. Abstract/Title Policy
  2. Membership in HOA
  3. Statutory Tax Districts
  4. Tide Waters
  5. Annexation
  6. Location…service area of utility service
  7. Public Improvement District
  8. Transfer Fees
  9. Propane Gas System Service Area